How has the merger of Alcatel and Lucent panned out in the Indian context?
This is by far the biggest merger of the year. The coming together of Alcatel and Lucent has given us the opportunity to offer our customers much more than what we were previously offering as individual entities. Combining the strengths in CDMA and GSM has done wonders for us. That is perhaps why a company like Reliance has chosen us. Further, our India research and development sector has got a fillip. It is one of the largest in the country today and far bigger than any of our competitors.
Both companies have brought together their expertise and over 2,000 people. This way the merger has made us very big.Alcatel-Lucent India has become the fifth largest Alcatel-Lucent worldwide after the US, China, France and Germany. Internally, it has given us a great product profile.
The perception is that Alcatel-Lucent is low key compared to its rivals in the race to provide infrastructure and capture market share.
That perception is incorrect. To explain, let’s start with our product portfolio, which ranges from submarine to satellite. We are the only company that has such a comprehensive range of products and solutions, and can meet the end-to-end requirements of any operator. In India, both GSM and CDMA are growing, hence necessitating ample network requirements.
There are two models of international connectivity, satellite and submarine.While submarine capacity is increasing, satellite is being used less for telecom and more for broadcasting.
In the realm of switching requirements, there are basically two types of switches: transit switches and local switches.
Now, looking at India and at AlcatelLucent, there have been five major submarine-based connectivity projects in the country, and we have been involved in four of the five. These include SEA??ME-WE 3 and SEA-ME-WE 4, Bharti’s network i2i project and Reliance’s expansion of Flag Telecom, Falcon. Each submarine project is worth anywhere from $300 million to $500 million. So, with a rough estimate, considering that all projects are worth the same, it could be said that we have 80 per cent market share on the submarine side.
Coming to the transmission segment, there are five major long distance operators: Bharat Sanchar Nigam Limited (BSNL), Tata, Videsh Sanchar Nigam Limited (VSNL), Reliance and Bharti. Of these, we have done countrywide transmission and backbone, and access for Tata, Bharti and BSNL. This amounts to nearly 60 per cent market share. Now, looking at the transit switches segment, we introduced that technology in India. We have over 50 per cent market share in this area and supply these switches not only to BSNL, but also to Tata and VSNL.
In the local switching business too, in the fixed line segment, there are 40 million lines. Between Alcatel and Lucent, we have installed 20 million lines. So, we have over 50 per cent market share in the segment. In CDMA, there are two major players ?? Reliance and Tata. Reliance and Tata have capacities of over 25 million and 8 million respectively. We have 100 per cent share of Reliance’s lines and around 10-15 per cent share of Tata’s lines as we set up their initial network. So, in totality, we have over 80 per cent market share in CDMA. Recently, we have got a contract from Reliance, which is doubling its capacity. We have the contract to install over two-thirds of that capacity. So consistently, we have more than 70 or 80 per cent market share in the CDMA segment.
In the GSM segment, we have 30 per cent share of BSNL’s GSM line expansion as 18 million lines are reserved for us. We also have 50 per cent share of Mahanagar Telephone Nigam Limited’s (MTNL) lines. Now, we also have 100 per cent share of Reliance’s GSM lines.
In the bigger picture, CDMA has 2025 per cent market share in India, and we have 80 per cent share of that. This translates into 17-20 per cent share of the overall market. Moreover, we have 12-13 per cent market share of GSM through BSNL and Reliance Telecom. So, our overall market share includes 13 per cent of GSM and 17 per cent of CDMA. This translates into around 30 per cent of the total wireless market.
The adverse perception is because most of the time people consider wireless to be GSM only. That is why they take our share of GSM, which is 13 per cent, and compare it with the rest of the players. But wireless is not only GSM.
Globally, your wireline business is considered to be much stronger than the wireless business…
This is true. There is a gap in our wireline and wireless market shares. We have an overwhelming presence in the wireline market while in wireless, our presence isn’t that overwhelming. However, suppose your child scores 99 in maths and 85 in physics, does it mean he or she is weak in physics? Analysts feel that a company’s presence in every market should be the same. It is true that our presence in the Indian government sector is larger than in the private sector.Similarly, our presence in the CDMA segment in India is larger than in the GSM sector.
The impression is that Alcatel-Lucent is more focused on the government sector as compared to the private sector. Your comments.
This is relevant only if one examines the fixed line segment. We have worked with BSNL and MTNL as these companies were the first telecom operators to service India. We have over 50 per cent market share in whatever they do. Obviously this impression has continued. It has also continued because, in the initial years, we were not present in the GSM business and the CDMA business started picking up only 2002 onwards. Thereafter, we have been market leaders in this segment. Also, as mentioned earlier, many people only associate wireless with GSM or rather they associate telecom with GSM, which is not the correct picture.
There is also a perception that AlcatelLucent offers several technologies and different product lines that may conflict in the future. Is that correct?
Today, we are the only players present in CDMA, GSM, 3G and Wi-Max, and we are successful in all these businesses. Our global share of CDMA and GSM is over 50 per cent and 15-17 per cent respectively. In 3G, we have 14-15 per cent market share worldwide. In ADSL, we have 47 per cent market share. In Wi-Max, we are already the leader and have deployed over 90 per cent of mobile Wi-Max. In transmission, there are many small players, but we are the number one. So, though analysts may comment that we are doing everything and hence cannot focus on everything, this is like saying that a child cannot score over 90 per cent marks in every subject. It depends on the child and not on the subject.
Analysts feel that as there would be an overlap in the products offered, some product lines may need to be discontinued, which could be detrimental. Do you agree?
Whenever two companies merge, they get two products for the same technology. But this has nothing to do with the product set. Take, for example, fixed line. Both companies have fixed line products. In the long run, we will have to focus on one if you want economies of scale. I don’t think that this is such a big issue. I don’t agree with any comment that states a company cannot survive with all technologies because this not the first time that such a thing is happening. All our businesses have survived. We are an excellent company. Of course, everyone cannot do it, but we are not an ordinary company, we are an exceptional company.
How important is the Indian market for Alcatel-Lucent internationally?
Internationally, the Indian market has all the positives. In India, Alcatel-Lucent has all four operations: sales and marketing, research and development (cDOT), manufacturing (ITI), and research (Bell Labs). We have set up Bell Labs and the C-DOT Alcatel Research Center in India. I do not think there are many companies that are undertaking all four operations in India. This is unique for Alcatel-Lucent worldwide as well.There are only three or four countries in which we are carrying out all four operations. Further, we have been increasing our investment in India throughout, as it is an important destination for us.
What are the company’s future plans?
In India, there is a managed services business model. Alcatel-Lucent globally has 57 operators for whom we are managing networks, but in India, we have not done so yet. Here, we will go into the business model of managed services and managed capacity. We would also like to achieve further consolidation of our GSM and 3G businesses. We would like to have more operators with us. We would like to focus on our new businesses, Wi-Max and mobile TV. We feel that in Wi-Max technology, we are far ahead of our competitors, and in terms of mobile TV, we are far more innovative.We would like to provide broadband and content everywhere. I would like to see our company taking a dominating position in these markets that are going to grow in the years to come.
In the fixed line business, we would like to ensure that we take a leadership position in IPTV. In transmission and submarine, etc., we would like to maintain our present market share. Similarly, we would like to maintain our market share in CDMA. For GSM, we would like to increase market share and go into different business models.
We also provide end-to-end solutions for infrastructure projects. We have carried out complete security, telecom and IT solutions for seven airports in the world. We are also the market leader for signalling. So, we would like to replicate the same structure in all the infrastructure projects.
In the last two to three years, our product range for the enterprise market has really changed. In a number of markets we have been ahead of Cisco. When enterprises initially started, they were all small, local enterprises. Now that telecom is providing complete solutions, all these enterprises are going global and want to deploy virtual global networks. This is where we would like to pitch in.
In India, we are market leaders in the IP segment for large enterprises and verticals. In this segment, we have grown from the 13th position to the number two position, which is a very significant growth globally.
